Rise in Gold Demand Puts All Eyes on Mining Industry

March 26, 2009

This Week, precious metals and mining stocks reached cyclical highs. As estimated in our last commentary, we observed highs on both March 9th and most recently on the 23rd, the last quarter lunar phase.

The rebound in gold prices were associated with record interest in gold trading and investing. Recently, we received news that the world's largest exchange traded fund, SPDR Gold Trust (GLD) expanded to 1,041 metric tons, an all-time record. It's not just traders that are increasingly interested in gold, but investors as well. A deluge of reports indicating high demand for gold coins will continue to force world government mints to increase production, coin dealers to increase inventory, and mining and exploration companies to find new resources.

Mining companies are more and more attractive as fears of inflation and expectations of higher precious metals prices persist. Among good news items in the mining sector, we learned that Rubicon Minerals hit yet another high-grade gold zone at Red Lake, Ontario. According to company executives, this is about the 12th such intersection, leading many to speculate about just how much gold Red Lake holds. Prices jumped ahead to $ 1.59--the highest price since early October. Considering that RBY came off lows below $ 1.30, traders had well over 22% profit opportunities in just 2 weeks.

Expect to see a decline starting at the end of this week and continuing until roughly around April 9th--a full moon. We'll be looking for higher support levels, above $900 for gold and above $ 1.30 for RBY.
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